The United States has officially enforced a 50 per cent tariff on Indian products, starting at 9:31 am today. This marks one of the harshest trade measures India has faced in recent years. Previously, Indian exports were already subject to a 25 per cent duty, but Washington has now added another 25 per cent as retaliation for New Delhi’s continued purchase of Russian oil.
Just days before the decision came into effect, Prime Minister Narendra Modi addressed an event in Ahmedabad, calling it an age of “economic selfishness” where countries look after their own interests first. He assured that India would resist the strain, declaring, “No matter how high the pressure, India will continue to build its strength to withstand it.”
Indian Exports Take a Hit
The US is India’s largest export destination, which makes the new tariff especially damaging. In the financial year ending March 2025, India shipped goods worth $434 billion, of which almost 20 per cent ($86.51 billion) went to the US.
According to the Global Trade Research Initiative (GTRI), about $60.2 billion worth of exports or 66 per cent of India’s total shipments to the US—will now attract the full 50 per cent tariff. This could slash exports to America from nearly $87 billion in 2024–25 to only $49.6 billion this year.
The worst affected sectors are textiles, gems and jewellery, shrimp, carpets, and furniture. GTRI estimates exports in these categories could fall by as much as 70 per cent.
As Shilan Shah, deputy chief emerging markets economist at Capital Economics, cautioned, “India’s attractiveness as an emerging manufacturing hub will be hugely undermined,” adding that the new duty is “large enough to have a material impact.”
The steep hike also erodes India’s edge in the US market, allowing rivals such as Vietnam, Bangladesh, Cambodia, and even China and Pakistan to step in with cheaper exports since their products face lower tariffs.
Millions of Jobs at Risk
The tariff shock is expected to cause widespread layoffs, particularly in labour-intensive sectors like textiles, jewellery, seafood, carpets, and furniture.
Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council (GJEPC), described the new duty as “doomsday” for the industry.
The textile sector is especially fragile. Vijay Kumar Agarwal, chairman of Creative Group, which makes fabrics and apparel, admitted they may need to close two of their eight factories. This could cost the jobs of 6,000–7,000 workers.
“We will have to close down a few factories, we have to give discounts to buyers, at 50 per cent it can’t go on for long, export of textiles from India to the US will probably not exist apart from some high-value items. Honestly, we are at a loss,” Agarwal told Moneycontrol.
The Confederation of Indian Textile Industry (CITI) also warned that India would lose its tariff advantage against other Asian competitors, except Bangladesh, which is itself a major exporter to the US.
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Impact on India’s Economy
Economists believe the tariffs will directly weigh on India’s economic growth.
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Gaura Sengupta, chief economist at IDFC First Bank, predicts a 0.4 per cent cut in FY26 GDP growth.
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Sakshi Gupta, principal economist at HDFC Bank, expects growth to slip below six per cent, saying: “We will have to significantly lower FY26 GDP growth forecast to below six per cent, baking in at least a 40–50 bps hit – double from our earlier estimates.”
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Goldman Sachs estimates GDP could fall by 0.6 percentage points.
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Capital Economics projects a bigger dent of 0.8 percentage points this year and next.
A report by Bloomberg added that the tariffs could further hurt corporate earnings, particularly in banks and IT companies, despite recent tax cuts announced by PM Modi to stimulate demand.
India Seeks Alternatives
Exporters are already appealing to the government for relief measures such as duty drawbacks or reimbursement schemes.
At the same time, the Commerce Ministry has identified nearly 50 alternative markets to expand exports, focusing on products like processed foods, leather goods, marine products, and textiles.
The next few months will be critical as India decides whether diplomacy can ease the strain or if the country is heading for a prolonged trade war with the US.
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